Journal of Reviews on Global Economics

BFO Theory with Variable Profit in Case of Advance Payments of Tax on Profit

Peter Brusov — 2023-02-08

The Brusov–Filatova–Orekhova (BFO) theory is generalized for the simultaneous account of variable company profit and advance tax on income payments. The generalized BFO formula for the WACC, has been derived. The dependence of WACC, discount rate, WACC–g (here g is growth rate), company capitalization, V, the equity cost, ke, on leverage L at various values of g, on debt cost, kd, and on age of the company, n, is studied. It is shown, that WACC, is no longer a discount rate. This role passes to WACC–g, which decreases with g, while the company's value increases with g. The tilt of curve k(L) growths with g. It is found that at the growth rate g < g* the tilt of the curve ke(L) is negative. This changes significantly the company's dividend policy principles. WACC(L) as well as the discount rate, WACC–g, decrease with the increase of debt cost kd. V (L) at all values of k_d increases with leverage L, as well V(L) increases with k_d. This means that tax shield advantages the decrease of the cost of raising capital. Examining the main financial parameters of the company at the positive (g=0.2) and negative (g=–0.2) growth rates, we found a huge difference in their behavior. This allows you to explore companies with growing profits and companies with decreasing profits, as well investigate the financial state of the companies whose profits rise and fall in different periods.

Selected Aspects of Internationalization in the Liberec Region and the Free State of Saxony

Zuzana Potužáková — 2023-07-14

Internationalization is a widely discussed topic analysed from various points of view. In our paper, we have decided to measure this trend in two border regions in former Eastern Germany and in Czechia, namely in Saxony and the Liberec region in the time period 2013-2020. Both areas belonged to the Eastern bloc before 1990. Saxony experienced a rapid reunification process within the early 1990s and Czechia a transformation process competed in 2004 by the EU accession.

In our paper, we have decided to test three hypotheses. First, we tested if Saxony is more internationalized in terms of human resources (1) and secondly with regard to export output (2). Then, we conducted the same tests on the Liberec region. Our assumption was that, due to the rapid reunification and favourable geographic proximity of lucrative Western markets, the position of Saxony would be more advanced.

Finally, we tested the hypothesis (3) that the rising number of foreign workers contribute to the rising export volumes. We correlated the indicators of employed foreigners and exports per head in both regions from 2013 to 2020.

The Impact of Taking into Account Information Asymmetries and the Credit Market Structure in the Assessment of Borrowers' Credit Worthiness: Case of Tunisia

Mohamed Miras Marzouki — 2023-12-31

We attempt to assess borrowers’ credit worthiness in three scenarios one heralding prevalence of information asymmetries the second heralding absence of information asymmetries and the third a realistic scenario encompassing both features for the sake of determining which one gives the best outcome in terms of goodness of fit and adequacy of the model specification with the corresponding market structure of the credit market in purview.

The added value of this research is that, when we want to estimate any entity, the explanatory variables carrying market imperfections must be manifested and not implicitly invocated because of the endogeneity of market imperfections and the market structure should be specified clearly; otherwise, the estimation is inadequate and the empirical results do not correspond to the theoretical predilections.

In other words, the conformity of empirical results with theoretical predilections does not rely on the absence of information asymmetries, whose full recognition does not introduce spuriousness into empirical results.

The research is a comparative cross investigation of scenarios highlighting the best fit to borrowers' Creditworthiness assessment and deducing through logical analysis the role payed by information asymmetries and the banking market power in shaping this fit.